Section 2(21) & Section 132
C. Instruction No: 530 date of Issue: 22/3/1973
In the circumstances normally the search warrant is only required to be produced to the person whose premises are searched and it is not necessary that a copy of the search warrant should be supplied to him. If, however, a writ petition is filed in the High Court challenging the validity of the search and the High Court directs that a copy of the search warrant should be furnished to the person whose premises are searched it should be complied with.
d. Instruction No.994-CbdT f.No. 286 / 37 / 76-IT (Inv.), dated 31-7-1976 If as a result of a search conducted by the Department under section 132 of the Income-tax Act, 1961, an article is placed under a prohibitory order/
seized, which, prima facie, appears to be an antiquity or of such an artistic or aesthetic value as worthy of being declared an “art treasure” in terms of section 2 of the Antiquities and Art Treasures Act, 1972, it should be immediately brought to the notice of the Superintending Archaeologist of the area (list of Superintending Archaeologists annexed) and his advice sought whether the article is an antiquity or worthy of declaration as an art treasure. Thereafter, a report should be made (in duplicate) as early as possible to the Director of Inspection (Inv.) giving full particulars of the article, the advice received from the Superintending Archaeologist, along with its approximate market value as given by the latter and/or a valuer.
The article should not be released to the assessee or otherwise disposed of till the receipt of the Director of Inspection’s instruction
It may be carefully noted that in view of the provisions of the Antiquities and Art Treasures Act, the Income-tax Authorities cannot undertake any sale / auction of antiquities. When an antiquity or art treasure is compulsorily acquired by the Government, the compensation amount will be dealt with in accordance with the provisions of section 132 / 132B of the Income-tax Act. If the Director General, Archaeological Survey of India advises that the Government are not interested in acquiring an antiquity, it will have to be sold, where necessary, through a licensed dealer.
e. Instruction No: 1180 date of Issue: 1/6/1978
Reference to the valuation cell in search & seizure cases. Some of the search and seizure operations have revealed considerable understatement of the value of immovable properties that the full investment in immovable properties, plant and machinery have not been disclosed by the assessees.
Commissioners should get immovable properties etc. valued in appropriate cases wherever there is a reasonable ground for suspecting substantial under valuation / understatement of investment in accordance with the guidelines contained in Instruction No.365.
f. Instruction No.1497 dt.13Th january, 1983, Search and Seizure-Open-ing of Lockers
To ensure that the information about lockers is available early, the authorized officers should soon after entering the premises, record the parties’ statement and get him/her committed about the number of lockers, contents thereof and source of acquisition. The lockers would be opened as early as possible, but in any case within a week. It has been decided that where the lockers sealed cannot be opened within the period of 7 days, the reasons for the delay should be intimated to the Director General (Investigation). The information about the lockers which remained sealed for more than a week as on 30th Nov.,1982 should be sent to the Director General (Investigation)/Board so as to reach not later than 31st Janl,1983. The report for subsequent months should reach the Director General (Investigation) by the 15th of the following months.
G. Circular No. 1590, dated 21-12-1984 f.No. 287 / 25 / 83-IT (Inv. II), states treatment of unaccounted stocks restrained / seized in benami / fictitious names.
There may be cases where assets in the form of unaccounted stocks have been restrained / seized by the Department apparently held in the benami names. In some cases, the bank accounts might have also been discovered which were operated in the names of fictitious persons. It has been decided that the following course of action should be adopted in all such cases:-i. The Income-tax Officer having territorial jurisdiction at the address
declared should issue a notice under section 139(2) in the name of a person who is declared as an owner of the said assets.
ii. As the said person is not likely to be available at this address, the notice should be served by affixing a copy of the notice on the Notice Board of the Income-tax Officer and a copy of the banker as also to the person, such as Port Trust authorities, customs authorities, warehouse-keepers, etc., in whose custody the assets are lying at present.
iii. In such cases, only the value of the investments should be taken as the income of the assessee by invoking the provisions of section 68,69, etc., and no ad hoc addition should be made.
It may also be noted that assessments in the hands of benamies are of protective nature and appropriate action may continue to be taken.
h. CbdT Circular No. 611, dated 30-9-1991
The Assessing Officers, in any proceedings under the direct tax laws, will not make any enquiry with regard to remittances in foreign exchange received under the Remittance in Foreign Exchange (Immunities) Scheme, 1991 or gift of any India Development Bonds from a non-resident Indian/
overseas corporate body. There should, therefore, be no apprehension of any prejudice against the persons in receipt of remittances under the scheme or donees of India Development Bonds. There should also be no fear of any harassment by the tax authorities. Where Bonds were issued as per Remittance of Foreign Exchange and Investment in Foreign Exchange Bonds Act, 1991 - Clauses VI and VII of said Act provides immunities to bond holder. No investigation can be allowed to be held pertaining to Indian development Bonds which were received from NRIs/overseas corporate bodies as gift and, thus, no addition could be made in hands of assessee. Commissioner of Income-tax v. Smt. Usha Omer[2011] 16 taxmann.com 377 (All.)
I. f.NO. 286/247/98-IT (INV.-II) 2Nd feb.,1999 To,
All Director Generals of Income tax (Inv.) All Chief Commissioners of Income tax,
Sub: Search and Seizure cases – release of seized assets – Instructions reg.
Sir,
1. Instances have come to the notice of the Board of seizure of assets, which prima facie, appear to have been disclosed in the regular books of account maintained by the persons subjected to the search action.
2. In such cases of seizure of declared assets, the seized assets could be released subject of course to recovery action by the Department against existing arrears.
3. There are also instances where jewellery or perishable stocks are seized. The searched parties sometimes request for release of jewellery on grounds of need for personal use. The perishable stocks again, if not released, could deteriorate in quality leading to erosion in their value. In such cases, it has been decided that if an unconditional irrevocable bank guarantee to the full extent of the value of the seized assets is given, the assets could be released to that extent. The valuation is to be done by the Income-tax Department and the guarantee should be clear and unequivocal.
4. The bank guarantee should be valid till the relevant assessment proceedings are complete and taxes are collected. The Department should have the option to enforce the guarantee at any point of time.
5. It will also be ensured that in cases where the seized assets will have specific evidentiary value in prosecution the assets will not be released till the completion of prosecution proceedings.
Yours faithfully,
(Kavita Bhatnagar)
Under Secretary to the Govt. of India
j. NO CONfeSSIONAL STATeMeNT IN The COuRSe Of SeARCh, SeIzuRe ANd SuRVeY
f.No. 286/2/2003 – IT (Inv) GOVeRNMeNT Of INdIA
MINISTRY Of fINANCe & COMPANY AffAIRS dePARTMeNT Of ReVeNue
CeNTRAL bOARd Of dIReCT TAXeS Room No.254/North block,
New delhi, the 10th March,2003.
To
All Chief Commissioners of Income Tax, (Cadre Contra)
& All Directors General of Income Tax Inc., Sir,
Subject: Confession of additional income during the course of search & seizure and survey operation – regarding.
Instances have come to the notice of the Board where assesses have claimed that they have been forced to confess the undisclosed income during the course of the search & seizure and survey operations. Such confessions, if not based upon credible evidence, are later retracted by the concerned assesses while filing returns of income. In these circumstances, on confessions during the course of search & seizure and survey operations do not serve any useful purpose. It is, therefore, advised that there should be focus and concentration on collection of evidence of income which leads to information on what has not been disclosed or is not likely to be disclosed before the Income Tax Departments. Similarly, while recording statement during the course of search & seizures and survey operations no attempt should be made to obtain confession as to the undisclosed income. Any action on the contrary shall be viewed adversely.
Further, in respect of pending assessment proceedings also, assessing officers should rely upon the evidences/materials gathered during the course of search/survey operations or thereafter while framing the relevant assessment orders.
Yours faithfully, Sd/-(S.R.Mahapatra)
K. Instruction No. 1916, dated 11-05-1994, Guidelines for seizure of jewellery and ornaments in the course of search.
a) In the case of wealth tax assessee, gold jewellery and ornaments found in excess of gross weight declared in the wealth tax return only need be seized.
b) In the case of person not assessed to wealth tax gold jewellery and ornaments to the extent of 500 gms per married lady, 250 gm per unmarried lady, and 100 gms per male member of the family need not be seized.
c) That the Authorized Officer may having regard to the status of the family and the customs and the practices of the community to which the family belongs and other circumstances of the case, decide to exclude a larger quantity of jewellery and ornaments from seizure.
This should be reported to the Director of Income Tax / Commissioner authorizing the search at the time of furnishing the search report.
d) In all cases, a detailed inventory of the jewellery and ornaments found must be prepared to be used for assessment purposes.
L. Instruction No.2/2004, dated 23-02-2004 by board in “written sub-missions in Appeals/writ filed before the high Court.
Board directed that wherever validity of search is challenged by assessee or defended by department:
a. The statement of written submission by department incorporating there in all relevant facts i.e. satisfaction note, brief outline of steps of enquiry, gist of information already with the department vis a vis stock, bullion, cash and other relevant material etc irrespective of the fact, HC ask for it or not.
b. Where orders u/s 158 BC, 158 BD, 153A, 153C are quashed by ITAT, on ground that no valid search existed, then CCIT/CIT/DGIT(Inv.), DIT(Inv.) should jointly ensure compliance with direction supra.
c. The written submission made before HC along with paper book compilation should be forwarded to the Board, wherein SLP is recommended against the order of HC quashing the search.
d. The Counsels of department should be directed in writing to make the aforesaid submissions, before the Hon’ble High Court, in addition to oral pleadings
Note : No warrant in the name of firm, search & seizure of books of account of firm on basis thereof was invalid. [ Case : K.R. Modi & co. v. DDIT (Inv.) (2005) 272 ITR 587 (cal.)]
M. Instruction No.11 of 2006, dT. Ist dec., 2006
Instruction regarding release of cash deposit in the PD Account:
-a) That where application filed u/s 132 B(1)(I) for release of seized cash, the cash seized should be released with in time limit provided after adjustment against existing liability.
b) If the cash is not released under first proviso of S. 132B(1)(I), the amount should be released with in one month of passing the search &
seizure order after.
- adjustment of existing liability determined.
- if penalty initiated, balance to meet the penalty amount imposable.
c) If the assessment order passed is a subject matter of appeal before CIT(A) the amount should be released with in one month of passing the order u/s 250 after.
- adjustment of liability determined at that time.
- balance to meet the expected amount of penalty imposable
d) The amount retained to meet out the penalty imposable should be released with in one month of passing the penalty order.
e) If any cash is seized before issue of this instruction and cash in PD account has not been dealt with or partly dealt, such cash should be released with in one month of this Instruction following the manner indicated there in.